What Is a Series LLC?
A series LLC is a cuttingedge business form allowed in Alabama that lets you create a “master” LLC with one or more “series” (sometimes called cells or pods) inside. Each series can own assets, incur liabilities, and conduct business separately from the others. In a lawsuit or liability event, only the assets of the single series at risk are exposed—the rest remain insulated.
Use cases for a series LLC in Alabama: Real estate investors (each property in its own series) Entrepreneurs with multiple, unrelated ventures Ecommerce shops selling different brands under one holding entity
What Is a Professional LLC (PLLC)?
A professional LLC, or PLLC, is required by Alabama for any business entity offering statelicensed professional services. Think law, medicine, accounting, architecture—if each member must hold a license to practice, you need a PLLC. Alabama law restricts ownership in a PLLC strictly to members who are licensed in the relevant field. Outside investors or unlicensed individuals cannot be members.
Use cases for a PLLC: Law firms Doctors’ offices CPA groups Professional engineers or architects
Comparing Series LLC vs Professional LLC Alabama
1. Purpose and Who Can Own
Series LLC: Open to all individuals or entities (no licensing restriction). Ownership can be shared across individuals, businesses, or trusts. No requirement that owners have any specific professional credential. PLLC: Only licensed professionals in the relevant field may be members or managers. Alabama Secretary of State and the regulating board oversee compliance.
2. Asset Protection and Liability
Series LLC: Internal asset partitioning—creditors of Series A can’t go after Series B or the parent LLC, assuming formalities are maintained (separate books, accounts, contracts). PLLC: Offers standard LLC limited liability for business debts, but does NOT protect an individual member from personal malpractice. If you commit professional negligence, your personal assets are at risk.
3. Formation and Paperwork
Series LLC: One filing to form the parent (master) LLC, then internal documents to establish individual series. Each series should keep its own books, bank accounts, contracts, and asset titles. PLLC: Regular LLC filing plus proof of all members’ professional licenses. Annual reports often involve extra steps with licensing authority.
4. Regulatory Scrutiny
Series LLC: Minimal—unless operating in regulated industries, the Secretary of State mainly checks general compliance. PLLC: Intense—subject to state licensing board review and audit, with rules for advertising, names, and conduct.
5. Use Case Flexibility
Series LLC: Best for businesses needing liability siloing but not subject to licensing restrictions. PLLC: Mandatory for regulated professionals; rigid structure, less flexibility for asset protection between different lines.
A Practical Example
An Alabama investor owning six rental homes forms a series LLC: LLC1, Series A (Home 1), Series B (Home 2), etc. A major tenant lawsuit at Home 2 could not reach assets of other homes. But a law firm in Montgomery must use a PLLC—each lawyer is liable for their own legal errors, but shielded from colleagues’ debts (not malpractice).
series llc vs professional llc alabama: Taxation
For federal and state taxes, both are passthrough entities by default—profits and losses flow to members’ personal returns. However:
Each series in a series LLC may need a separate EIN if assets or members differ. PLLCs file as a regular LLC unless owners elect otherwise. All members must report income based on their share.
Limitations and Pitfalls
Series LLCs: Not every state recognizes the series structure. Moving property or doing business across state lines can jeopardize internal shields. Commingling assets or sloppy record keeping voids internal protections. PLLCs: No asset isolation for different lines; the whole PLLC (and members) may be exposed to business debts, partnership malpractice, or licensing violations.
When to Pick Series LLC or PLLC
Go SERIES if: You hold multiple, nonprofessional ventures or real estate, want liability protection between “buckets,” and do not require state licensure. Go PLLC if: Alabama law or your board requires it (medicine, law, architecture, etc.)—no choice here. You must be licensed, comply with strict rules, and accept personal liability for malpractice.
Compliance Essentials
Draft strong internal operating agreements; require rigorous bookkeeping for each series. For PLLCs, ensure every member’s license/registration is current before filings—lapsed licenses can invalidate the whole entity. Stay on top of annual reports, both to Alabama’s Secretary of State and the relevant boards.
Final Thoughts
The decision between a series llc vs professional llc alabama is more than a box to check on a form. It shapes your risk, regulatory burden, and flexibility year after year. Choose a series LLC when you need creative asset protection for unrelated ventures and aren’t limited by professional licensing. Use a PLLC when the law requires it—no exceptions and no workarounds. Consult an Alabama business attorney or CPA with direct experience in both structures before making your move. The right LLC keeps your foundation solid and your risk contained, so you can focus on building a business that lasts.